THE AIR CORPORATIONS (TRANSFER OF UNDERTAKINGS AND REPEAL) ACT, 1994 
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ARRANGEMENT OF SECTIONS 
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SECTIONS 

1.  Short title and commencement. 
2.  Definitions. 
3.  Undertakings of corporations to vest in companies. 
4.  General effect of vesting of undertakings in the companies. 
5.  Licences, etc., to be deemed to have been granted to companies. 
6.  Tax exemption or benefit to continue to have effect. 
7.  Guarantee to be operative. 
8.  Provisions in respect of officers and other employees of corporations. 
9.  Power of Central Government to give directions. 
10.  Power to remove difficulties. 
11.  Repeal of Act 27 of 1953 and cesser of corporations. 
12.  Repeal and saving. 

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THE AIR CORPORATIONS (TRANSFER OF UNDERTAKINGS AND REPEAL) ACT, 1994 

ACT NO. 13 OF 1994 

 [21st March, 1994.]  

An  Act  to  provide  for  the  transfer  and  vesting  of  the  undertakings  of  Indian  Airlines  and  Air 
India respectively to and in the companies formed and registered as Indian Airlines Limited 
and Air India Limited and for matters connected therewith or  incidental thereto and also to 
repeal the Air Corporations Act, 1953. 

BE it enacted by Parliament in the Forty-fifth Year of the Republic of India as follows:— 

1. Short title and commencement.—(1) This Act may be called the Air Corporations (Transfer of 

Undertakings and Repeal) Act, 1994. 

(2) It shall be deemed to have come into force on the 29th day of January,1994.  

2. Definitions.— In this Act, unless the context otherwise requires,— 

(a)  “appointed  day”  means  such  date  as  the  Central  Government  may,  by  notification  in  the 

Official Gazette, appoint under section 3;  

(b)  “company”  means  “Indian  Airlines  Limited”  or  “Air  India  Limited”  formed  and  registered 

under the Companies Act, 1956 ( 1 of 1956); 

(c) “corporations” means "Indian Airlines" and “Air India” established under section 3 of the Air 

Corporations Act, 1953 (27 of 1953), and “corporation” means either of the corporations.  

3. Undertakings of corporations to vest in companies.—On such date as the Central Government 

may, by notification in the Official Gazette, appoint, there shall be transferred to, and vest in,— 

(a) Indian Airlines Limited, the undertaking of Indian Airlines; and 

(b) Air India Limited, the undertaking of Air India.  

4.  General  effect  of  vesting  of  undertakings  in  the  companies.—(1)  The  undertaking  of  a 
corporation  which is transferred  to,  and  which  vests  in,  a  company  under  section  3  shall  be  deemed  to 
include all assets, rights, powers, authorities and privileges and all properties, movable and immovable, 
real or personal, corporeal or incorporeal, in possession or reservation, present or contingent, of whatever 
nature  and  wheresoever  situate,  including  lands,  works,  workshops,  aircrafts,  cash  balances,  capital 
reserves,  reserve  funds,  investments,  tenancies,  leases  and  book  debts  and  all  other  rights  and  interests 
arising out of such property as were immediately before the appointed day in the ownership, possession or 
power  of  that  corporation  in  relation  to  its  undertaking,  whether  within  or  outside  India,  all  books  of 
account and documents relating thereto and shall also be deemed to include all borrowings, liabilities and 
obligations of whatever kind then subsisting of that corporation in relation to its undertaking. 

(2)  All  contracts  and  working  arrangements  subsisting  immediately  before  the  appointed  day  and 
affecting a corporation shall, in so far as they relate to the undertaking of that corporation, cease to have 
effect or to be enforceable against that corporation and shall be of as full  force and effect against or in 
favour of the company in which the undertaking has vested by virtue of this Act and enforceable as fully 
and effectually as if, instead of the corporation, the company had been named therein or had been a party 
thereto. 

 (3) Any proceeding or cause of action pending or existing immediately before the appointed day by 
or against a corporation in relation to its undertaking may, as from that day, be continued and enforced by 
or against the company in which it has vested by virtue of this Act, as it might have been enforced by or 
against that corporation if this Act had not been passed, and shall cease to be enforceable by or against 
that corporation. 

5.  Licences,  etc.,  to  be  deemed  to  have  been  granted  to  companies.—With  effect  from  the 
appointed day, all licences, permits, quotas and exemptions granted to a corporation in connection with 

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the affairs and business of that corporation under any law for the time being in force, shall be deemed to 
have been granted to the company in which the undertaking of that corporation has vested. 

6. Tax exemption or benefit to continue to have effect.—(1) Where any exemption from, or any 
assessment with respect to, any tax has been granted or made or any benefit by way of set off or carry 
forward, as the case may be, of any unabsorbed depreciation or investment allowance or other allowance 
or loss has been extended or is available to a corporation under the Income-tax Act, 1961 (43 of 1961), 
such exemption, assessment or benefit shall continue to have effect in relation to the company in which 
the undertaking of that corporation has vested.  

(2) Where any payment made by a corporation is exempt from deduction of the tax at source under 
any  provision  of  the  Income-tax  Act,  1961  (43  of  1961),  the  exemption  from  tax  will  continue  to  be 
available as if the provisions of the said Act made applicable to the corporation were operative in relation 
to the company in which the undertaking of that corporation has been vested. 

(3) The transfer and vesting of the undertaking or any part thereof in terms of section 3 shall not be 
construed as a transfer within the meaning of the Income-tax Act, 1961 (43 of 1961) for the purposes of 
capital gains. 

7. Guarantee to be operative.—Any guarantee given for or in favour of a corporation with respect to 
any  loan  or  lease  finance  shall  continue  to  be  operative  in  relation  to  the  company  in  which  the 
undertaking of that corporation has vested by virtue of this Act.  

8.  Provisions  in  respect  of  officers  and  other  employees  of  corporations.—(1)  Every  officer  or 
other  employee  of  a corporation (except a  Director of  the  Board,  Chairman,  Managing  Director or  any 
other  person  entitled  to  manage  the  whole  or  a  substantial  part  of  the  business  and  affairs  of  the 
corporation)  serving  in  its  employment  immediately  before  the  appointed  day  shall,  in  so  far  as  such 
officer or other employee is employed in connection with the undertaking which has vested in a company 
by virtue of this Act, become, as from the appointed day, an officer or other employee, as the case may 
be, of the company in which the undertaking has vested and shall hold his office or service therein by the 
same tenure, at the same remuneration, upon the same terms and conditions, with the  same obligations 
and with the same rights and privileges as to leave, passage, insurance, superannuation scheme, provident 
fund,  other  funds,  retirement,  pension,  gratuity  and  other  benefits  as  he  would  have  held  under  that 
corporation if its undertaking had not vested in the company and shall continue to do so as an officer or 
other employee, as the case may be, of the company or until the expiry of a period of six months from the 
appointed  day  if  such  officer  or  other  employee  opts  not  to  be  the  officer  or  other  employee  of  the 
company, within such period. 

(2) Where an officer or other employee of a corporation opts under sub-section (1) not to be in the 
employment  or  service  of  the  company  in  which  the  undertaking  of  that  corporation  has  vested,  such 
officer or other employee shall be deemed to have resigned. 

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any 
other law for the time being in force, the transfer of the services of any officer or other employee of a 
corporation to a company shall not entitle such officer or other employee to any compensation under this 
Act or under any other law for the time being in force and no such claim shall be entertained by any court, 
tribunal or other authority. 

(4) The officers and other employees who have retired before the appointed day from the service of a 
corporation  and  are  entitled  to  any  benefits,  rights  or  privileges  shall  be  entitled  to  receive  the  same 
benefits, rights or privileges from the company in which the undertaking of that corporation has vested. 

(5)  The  trusts  of  the  Provident  Fund  or  Pilots  Group  Insurance  and  Superannuation  Scheme  of  the 
corporation  and  any  other  bodies  created  for  the  welfare  of  officers  or  employees  would  continue  to 
discharge their functions in the company as was being done hitherto in the corporation. Tax exemption 
granted to Provident Fund or Pilots Group Insurance and Superannuation Scheme would continue to be 
applied to the company. 

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(6) Notwithstanding anything contained in this Act or in the Companies Act,  1956 (1of 1956) or in 
any other law for the time being in force or in the regulations of a corporation, no Director of the Board, 
Chairman, Managing Director or any other person entitled to manage the whole or a substantial part of the 
business and affairs of that corporation shall be entitled to any compensation against that corporation or 
against the company, as the case may be, for the loss of office or for the premature termination of any 
contract of management entered into by him with that corporation. 

9.  Power  of  Central  Government  to  give  directions.—The  Central  Government  may  give  toa 
company  directions  as  to  the  exercise  and  performance  by  that  company  of  its  functions,  and  that 
company shall be bound to give effect to any such directions. 

10. Power to remove difficulties.—(1) If any difficulty arises in giving effect to the provision of this 
Act, the Central Government may, by order published in the Official Gazette, not inconsistent with the 
provisions of this Act, remove the difficulty: 

Provided that no such order shall be made after the expiry of a period of two years from the coming 

into force of this Act. 

(2) Every order made under sub-section (1) shall be laid before each House of Parliament.  

11.  Repeal  of  Act  27  of  1953  and  cesser  of  corporations.—(1)  On  the  appointed  day,  the  Air 

Corporations Act, 1953 shall stand repealed. 

(2) The corporations shall, with the repeal of the Air Corporations Act, 1953, cease to exist.  

12.  Repeal  and  saving.—(1)  The  Air  Corporations  (Transfer  of  Undertakings  and  Repeal) 

Ordinance, 1994 (Ord. 4 of 1994) is hereby repealed.  

(2)  Notwithstanding  such  repeal  of  the  Air  Corporations  (Transfer  of  Undertakings  and  Repeal) 
Ordinance, 1994 (Ord. 4 of 1994), anything done or any action taken under the said Ordinance shall be 
deemed to have been done or taken under the corresponding provisions of this Act. 

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